RPM International (RPM) Q2 2022 Earnings Call Transcript

RPM International (RPM -0.29%)
Q2 2022 Earnings Call
Jan 05, 2022, 10:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Welcome to RPM International's conference call for the fiscal 2022 second quarter. Today's call is being recorded. This call is also being webcast and can be accessed live or replayed on the RPM website at www.rpminc.com. Comments made on this call may include forward-looking statements based on current expectations that involve risks and uncertainties, which could cause accurate results to be materially different.

For more information on these risks and uncertainties please review RPM's reports filed with the SEC. During this call, references may be made to non-GAAP financial measures. To assist you in understanding these non-GAAP terms RPM has posted reconciliations to the most directly comparable GAAP financial measures on the RPM website. Following today's presentation, there will be a question and answer session.

[Operator instructions] At this time, I would like to turn the call over to RPM's chairman and CEO, Mr. Frank Sullivan for opening remarks. Please go ahead, sir.

Frank Sullivan -- Chairman and Chief Executive Officer

Thank you, Dee. Good morning and Happy New Year. Welcome to the RPM International and investor call for our fiscal 2022 second quarter. Joining me on the call today is Rusty Gordon, our vice president and chief financial officer; and Mike Laroche, vice president, controller, and chief accounting officer.

I'll begin by sharing broad commentary on our consolidated performance for the quarter. Mike will provide details on our segment results and Rusty will conclude our formal comments with our outlook for the fiscal 2022 third quarter. Our comments will be on an adjusted basis and all comparisons are to the second quarter of fiscal 2021 unless otherwise indicated. Please note that we provided a supplemental slide presentation to support our comments on this call.

These can be assessed in the presentations and webcast section of the RPM website, www.rpminc.com. After our formal remarks, we'll be pleased to take your questions. I'll start with comments related to the third slide in the presentation material. For the fiscal 2022 second quarter, consolidated sales increased 10.3% to $1.64 billion driven by continued robust demand for paints, coatings, sealants, and other building materials.

This top-line performance was slightly ahead of the outlook we provided last quarter. Our second quarter sales growth could have been even stronger if not for continuing supply chain challenges that limited access to certain raw materials and cost us roughly $200 million of lost or deferred sales in the quarter. Organic sales growth was 8.6%, foreign currency translation provided a tailwind of 0.4% and acquisitions contributed 1.3%. Adjusted EPS was $0.79 decreasing 26% compared to the strong adjusted diluted EPS growth of nearly 40% in the prior-year period.

Consolidated adjusted EBIT for the quarter was a $157.3 million decrease of 21%, which was in line with our outlook and as a result of continued material, wage, and freight inflation, as well as supply chain disruptions that were exacerbated by hurricane Ida. At the beginning of the second quarter and increased our conversion costs because of this supply disruption. We lost the equivalent of nearly 300 production days across RPM facilities globally during the second quarter, which was similar to our lost production days in the first quarter. We partially offset these challenges with price increases, which average in the high single digits across RPM, and continued operational improvements from our map to growth program, which provided $19 million in incremental cost savings.

It's also worth noting that we face a difficult comparison to the prior year when consolidated adjusted EBIT increased nearly 30%. Largely due to higher sales volumes driven by extraordinary demand for our home improvement products in our consumer group during the pandemic. To recover lost margin from the inflation, we are implementing an additional round of price increases this quarter across our business segments as appropriate. In many instances,  this will be the third round of price increases in a 12-month period.

The next slide provides high-level results by segment much like last quarter. Our performance reflects the benefits of our balanced business portfolio where softness in one segment is generally offset by strength in others. During the second quarter of fiscal 2022, three of our four operating segments Construction Products Group, Performance Coatings Group, and Specialty Products Group generated strong double-digit sales growth. Combined sales in these three segments increased more than 18% with roughly 10% being unit volume growth year over year while our Construction Products and Performance Coatings Group generated strong adjusted EBIT growth especially products and consumer group faced extreme supply chain constraints that put pressure on their earnings.

In particular, the Specialty Products Group restoration equipment business was affected by worldwide semiconductor chip shortages that delayed sales to a growing backlog and unfavorably drove product mix. The Consumer Group continued to experience inflationary pressures, as well as shortages of key raw materials driven largely by last year's production outage at a key resins supplier that negatively impacted conversion costs. In addition, the consumer group faced a difficult comparison to the prior-year period when sales increased more than 21% and adjusted EBIT was up 66%. These growth rates in the prior-year period were largely due to the extraordinary DIY demand during the pandemic.

All indicators suggest that the underlying demand for our consumer products remains strong and that is continuing to grow in our third quarter. Before we move to the details on our segment results, I'd like to touch on two larger trends and RPM is well-positioned to capitalize on. First, as the US government has passed a number of bills over the last two years that will direct billions and potentially trillions of dollars toward construction in infrastructure and markets. Based on our strong position with these markets with well recognized highly regarded brands such as Tremco roofing systems and commercial sealants, [Inaudible] corrosion control coatings, Euclid concrete admixtures, and Nudura Insulated Concrete Forms all of which have been gaining market share in this fiscal year.

We are well-positioned for continuing meaningful growth in North America and globally. Two years ago, we introduced the tag line building a better world. In a number of our communications, it certainly represents our products and services, which literally contribute to making structures better through beautification, protection, restoration, and sustainability. But it's also meant to be aspirational, as we strive to make the world a better place for those we serve including our customers, entrepreneurs, associates, shareholders in the communities in which we operate.

As we all continue to manage through the global pandemic, we remain focused on coming together to make the world a better place for everyone. There are many examples where RPM is doing so. Some of the ways our PM is building a better world include, the development of sustainable products such as our AlphaGuar Liquid Applied roofing products, which are gaining market share and allowing roofs to be restored and eliminating the need for tear-off a replacement and significant contributions to waste sites. In addition, our Tremco roofing business has been named a bio preferred program pioneered by the USDA because of our early adoption of sustainable product solutions within our roofing division and the industry.

Talent development which includes the right education and training initiative that is part of our WTI business and was developed in response to the shortage of qualified roofers includes an element called ELEVATE. This involves the training of incarcerated individuals in roofing so that they have skills and job opportunities upon their release at which time they are guaranteed a job at our Tremco roofing business. And sustainability practices across our operations such as initiatives to reduce water usage that are saving millions of gallons a year to Day-Glow, Rust-Oleum, and other businesses. You can learn more about how RPM is building a better world on our website and in our ESG report at www.rpminc.com/esg.

We have a great story to tell and we will be organized to tell it better in the coming quarters and years. We remain focused on long-term growth and despite COVID-related challenges especially in supply chains continue to invest in initiatives that will drive our business forward in the coming years. This includes operational improvements, the development of innovative new products, acquisitions, and manufacturing capacity expansions. Case in point 178,000 square foot plant we purchased in September, which is located on 120 acres in Texas.

This will serve as a manufacturing center of excellence for multiple RPM businesses. In just two months, it is already improving the resiliency of our supply chain and fill rates. During the second quarter, we began production of alkyd resins, which are the important raw materials for a number of our products, particularly in our Consumer Group. In the coming quarters, the plant expansion expanded the production of a number of our high-growth product lines.

I'll now turn the call over to Mike to discuss our segment financial results in more detail.

Mike Laroche -- Vice President, Controller, and Chief Accounting Officer

Thanks, Frank, and good morning everyone. Turn to the next slide. Our Construction Products Group generated all-time record sales of $614.2 million. Sales grew 22% for the quarter the highest rate among our four segments,19.9% was organic.

Foreign currency translation provided at 0.3% tailwind and acquisitions contributed 1.8%. CPG is market-leading top-line growth and positive mix were primarily driven by innovation and its high-performance building solutions, market share gains, and strong demand in North America for its construction and maintenance products. The businesses that generated the highest growth included those providing insulated concrete forms, roofing systems, concrete admixture and repair products, and commercial sealants. Sales of our Nudura ICF have been particularly robust because they offer an alternative to lumber, which is in short supply and experiencing skyrocketing costs, and because Nudura ICF provides structural, insulation, and labor benefits.

Performance in international markets was mixed with Europe fairly flat while emerging markets showed signs of recovery. The segments adjusted EBIT increased 16.5% to a record level due to volume growth, operational improvements, and selling price increases, which helped offset material inflation. Moving to the next slide, positive trends from the first quarter carried over into the second for our Performance Coatings Group. Sales grew 16.9% to a record level reflecting organic growth of 12.2%, a foreign currency translation tailwind of 0.8% and a 3.9% contribution from acquisitions.

Nearly all of PCGs major business units contribute to the positive growth largely due to the catch-up of maintenance projects previously deferred by industrial customers. Particularly, as COVID restrictions relaxed on contractor access to construction sites improved. Sales growth was also facilitated by price increases and improved product mix driven by new decision support tools that helped improve salesforce efficiencies and product mix. Leading the way, were the segments largest businesses providing polymer flooring systems and corrosion control coatings.

Serving growing end markets including electric vehicles, semiconductors, and pharmaceuticals. Sales also remain strong and its recently acquired bison-raised flooring business and in emerging markets. Adjusted EBIT increased 41.3% to a record level as a result of pricing, volume growth, operational improvements, and product mix. Advancing to the next slide.

Our specialty products group reported a sales increase of 10% to a record level as its businesses capitalized on the strong demand in the outdoor recreation, furniture, and OEM markets they served. The segments fluorescent pigments business also generated good top-line growth. Organic sales increased 9%. Recent acquisitions added 0.4% and foreign currency translation increased sales by 0.6%.

Adjusted EBIT decreased 29.4% due to higher raw material and conversion costs from supply disruptions, as well as unfavorable product mix. Particularly, in our disaster restoration equipment business, which has been hindered by the semiconductor chip shortage as Frank had mentioned. In addition, the segment experienced higher expenses resulting from investment, investments and future growth initiatives, plus higher legal expenses. These factors were partially offset by operational improvements.

On the next slide, you'll see that the severe raw material shortages that the consumer group experienced during the fiscal 2022 first quarter persisted during the second quarter. The resulting production outages negatively impacted segment sales by approximately $100 million. Segment sales decreased 3.3% with organic sales down 3.5% and foreign currency translation of 0.2% despite raw material shortages. The segments fiscal 2022 second quarter sales were still 17.4% above the pre-pandemic levels of the second quarter of fiscal 2020.

Demand for its products remains high and inventories and many of its channels are low. We expect to recover these sales when raw material and supply conditions stabilize. As Frank mentioned in his opening comments, the consumer group also faced a challenging comparison to the prior-year period when sales increased 21.4% and adjusted EBIT increased 65.8%. Due to extraordinarily high demand for its home improvement products during the first phase of the pandemic.

Earnings decline during the fiscal 2022 second quarter from inflation of materials, freight, and labor, as well as the unfavorable impact of supply shortages on productivity. These factors were partially offset by price increases and operational improvements. The segment continues to add capacity to meet demand and build resiliency in its supply chain to secure the raw materials it requires in order to meet customer demand. It is using contract manufacturing at higher costs until it can bring new manufacturing capacity online.

It is also qualifying new sources for raw materials including our new manufacturing plant in Texas. Now I'll turn the call over to Rusty to discuss our outlook.

Rusty Gordon -- Vice President and Chief Financial Officer

Thanks, Mike. Looking ahead to our fiscal 2022 third quarter we expect that the strong demand for our paints, coatings, sealants and other building materials will continue. Supply chain challenges and raw material shortages have persisted in December further compounded by disruptions from the Omicron variant on RPM's operations and those of our supplier base. These factors are expected to put pressure on our top line and productivity.

In spite of these challenges, we expect to generate double-digit consolidated sales growth in the fiscal 2022 third quarter versus last year's record third quarter sales, which increased 8.1%. We anticipate high double-digit sales growth along with margin accretion in our Construction Products Group and Performance Coatings Group. SPG sales are expected to be at the low double digits as compared to last year's third quarter. The Consumer Group faces a tough comparison to the prior-year period when its sales increased 19.8% and as a result, its sales are anticipated to increase by low single-digit.

Consolidated adjusted EBIT for the third quarter of fiscal 2022 is expected to decrease 5% to 15% versus the same period last year when adjusted EBIT was up to 29.7%. We anticipate that earnings will be affected by ongoing raw material, freight, and wage inflation, as well as the impact of raw materials shortages, on sales volume, plus the renewed COVID disruption from the surging Omicron variant. These challenges will disproportionately impact our consumer segment. We continue to work to offset these challenges by implementing price increases, improving operational efficiencies, and bringing on additional manufacturing capacity.

Finally, I'd like to note that we remain laser-focused on executing our strategies for sustained growth. We remain vigilant about protecting the health of our employees, their families, and the communities in which we operate with the rise in COVID cases worldwide. We remain focused on processes and procedures to maintain safe and productive working environments for our associates. We continue to be agile in our management of the business allowing us to navigate supply chain issues, and meet customer needs.

We expect that margins will recover toward pre-pandemic levels once supply challenges abate. Lastly, we are investing in employee training and other initiatives that will drive long-term growth including operational improvements, innovations, acquisitions, capacity expansions, and information technology. These actions will optimally position RPM to deliver long-term growth and increased value for our stakeholders. This concludes our formal comments.

We will now be pleased to take your questions.

Questions & Answers:

Operator

Thank you, sir. [Operator instructions] Your first question comes from the line of Frank Mitsch of Fermium Research. 

Frank Sullivan -- Chairman and Chief Executive Officer

Good morning, Frank.

Frank Mitsch -- Fermium Research -- Analyst

Hey. Good morning, Frank, and Happy New Year to you. Hey, obviously, a lot of comments regarding the price indicated that that price was up in the high single digits here in the fiscal second quarter and you announced another round of price increases. What are your expectations for pricing in the back half of the fiscal year and where do we stand in terms of raw material inflation? Can you give us some color, as to what you were facing in the fiscal second quarter? What your outlook is on the raw side for the fiscal third quarter?

Frank Sullivan -- Chairman and Chief Executive Officer

Sure. In the second quarter, on a consolidated basis price was up 7.5%. And with the price that's already been announced and enacted in fiscal '22, we expect the price to have an 11.5% impact in Q3. Our raw materials are up pretty significantly in terms of where we are year over year.

We're up about 30% in total. We're up 40% to 50% and our top 20 raw materials. Were up in a couple of categories years over a year like epoxy resins, alkyd resins, over 100%. And, so that's some of the colors you're seeing.

I can tell you in general that it's a supply chain situation that is still very stressed. But as we sit here today seems to be improving. Feedstocks are improving. Although, we're not seeing that yet translated into the intermediates and specialties, which we buy availability of raw materials is improving in most areas.

But I will tell you the whole supply chain is still very susceptible to unexpected shocks. So it doesn't seem to be much pushing our resiliency in this improving environment. The last comment I'll make on that is freight is a kind of uniquely growing problem. Freight costs have been rising across all categories as we have commented in the past.

For particularly for truck transportation and most probably related to COVID infections or quarantines literally the abate availability of freight to move goods has become a challenge in the first part of our Q3.

Frank Mitsch -- Fermium Research -- Analyst

Gotcha, gotcha, and feeding off of that supply chain issue that you mentioned it's obviously part of the reason why you decided to increase your inventories here in the fiscal second quarter to try and get ahead of that where you can. And, so kind of basic question, as you look at your customers, you assume that your customers are probably doing the same. So, you and Rusty you mentioned again the robust demand that you're seeing out there which is obviously very positive, but to what extent might that be a little bit of double counting as customers are also seeking to raise their inventory levels? Do you have any good feel as to how that interplay is playing out?

Frank Sullivan -- Chairman and Chief Executive Officer

Sure. Well, I can assure you that our inventory levels are lower than they normally would be and provide tons of examples. But our fill rates are not at the 98%, 99% levels that have been the norm for decades. and there is a meaningful backlog of consumers.

So, the supply chains there are very tight on the finished goods side. In most of our product categories, we know the hundreds of millions of dollars per quarter that we're missing and revenue is in part due to supply chain disruptions in our ability production-wise just to get products out. And so I don't I don't think there's much cushion Frank in the inventory of our customer base and we're working hard to get some cushion back in there. And I suspect our customers would appreciate getting back to normal levels.

But we've had to defer revenues across multiple businesses and product lines because of the supply chain and production disruptions.

Frank Mitsch -- Fermium Research -- Analyst

Very helpful. Thank you.

Frank Sullivan -- Chairman and Chief Executive Officer

Thank you.

Operator

Your next question comes from the line of John McNulty of BMO Capital Markets.

John McNulty -- BMO Capital Markets -- Analyst

Yeah. Thanks for taking my question, Frank, good morning. So, when I look at the various businesses with regard to some of the inflationary pressure constructions manage it pretty well over the last couple of quarters performance as well, consumers seem to be taking it on the chin a lot harder and I assume that's largely tied to the alkyd outage that you referenced earlier. I guess, can you help us to understand how long before you feel like things are back to a steady-state.? In terms of alkyd supply, whether it's from the capacity that you're bringing on yourself or from other suppliers that you may be able to procure it from.

Can you give us a little bit of color on that?

Frank Sullivan -- Chairman and Chief Executive Officer

Sure. Yeah. I appreciate your comments broadly. We anticipated in Q3 continuing really strong growth in our Construction Products Group and Performance Coatings Group.

Including a return to some meaningful margin improvement. So you'll see nice leverage to the bottom line there, as we manage the cost price mix in those businesses and continue to take market share. You'll see improvement in our Specialty segment. And I think as we sit here today unless the COVID Omicron disruptions continue to get worse, we anticipate although the quarter is not over that it'll be the first quarter and three where you'll have all four of our segments positive from a revenue perspective.

The Consumer Group is the principal challenge in Q3 will be nicely positive in terms of EBIT across all our other businesses. And it's really related to a couple of things. It is related to alkyd resins, our primary supplier, as an outage that negatively impacted us. We've been scrambling both in terms of getting product and then also outsourcing production that's been an 18 months issue that we're working to resolve and we'll start making headwinds in the spring.

We are packaging-intensive not only within RPM but within the consumer paint industry within RPMs Consumer Group. We are a small project paints. We are small project paints, we are a small project passion repair, we are clocks and sealants. So packaging has been a disproportionally bigger challenge in terms of cost and also in terms of availability.

I think the last straw did drop there is an anticipation of another significant increase this spring template class, which will impact metal packaging across the whole industry. The last comment, I'll make is that we've had significant COVID disruptions within our Consumer Group. I can give you just some statistics. Broadly speaking this is what the world is seeing.

First, from a corporate campus of 100 people, we had 20 cases over the 18-month period of March 2020 through November on our corporate campus. We've had 14 cases in the last two weeks and most of those have been breakthroughs and most of those as far as we can tell have been at home. In our consumer segment, we had 108 cases in our operations alone. That's manufacturing and distribution sites over the last six months, we've had 97 cases in December.

And, so those are also disproportionately happening because we're pretty intensive in distribution and manufacturing and consumer, freight has been another issue. So, sorry for the long litany of challenges we're going to be positive in terms of sales growth year over year in consumer for the first time in three quarters and you're going to see significantly better resin flow, as we continue to ramp up the Texas facility that we acquired in September that's going as well or better than we anticipated.

John McNulty -- BMO Capital Markets -- Analyst

Got it. That's helpful color. And I guess maybe a question on the longer term, I know in the past you've cited a margin target of 16% in the long term and I think that that was still kind of the goal even though map to grow maybe gotten put held back a little bit. So maybe the timing was off.

I guess when you think about the huge pricing that you're pushing through and volumes that you're seeing now, but also the higher cost. I guess how should we think about that as still kind of a longer-term target is the bogey change at all or is it either a little bit lower or just given everything so inflationary? Is it a little bit higher because the pricing goes up and maybe eventually the raw is stabilized? I guess how should we be thinking about that.

Frank Sullivan -- Chairman and Chief Executive Officer

Great question and we still very much have in mind a 16% EBIT margin. To get there we're going to have to drive gross margin on a consolidated basis toward 42% and we have a lot of work to do there. Having said that we anticipate this spring that you will see a return to record margins in our Construction Products Group and our Performance Coatings Group. You'll see good progress in our Specialty Products Group in the area again that has had this most significant margin deterioration.

Roughly half of which has been a cost price mix issue and the other half of which has been just the incredible disruption to production throughput in the Consumer Group. And that part of our business is getting a lot of attention.

John McNulty -- BMO Capital Markets -- Analyst

Got it. Thanks very much for the color, Frank.

Frank Sullivan -- Chairman and Chief Executive Officer

Thank you.

Operator

Your next question comes from the line of Ghansham Panjabi of Baird.

Frank Sullivan -- Chairman and Chief Executive Officer

Good morning, Ghansham.

Ghansham Panjabi -- Robert W. Baird and Company -- Analyst

Hey, guys. Good morning. Good morning, Frank, Happy New Year to you as well. 

Frank Sullivan -- Chairman and Chief Executive Officer

Happy New Year.

Ghansham Panjabi -- Robert W. Baird and Company -- Analyst

Thank you. On the Construction Products Group just in terms of the regional breakdown they cited in the press release you pointed toward Europe being relatively flat and clearly strength in North America. Can you just give us a little bit more color in terms of what was going on in Europe that just deferred sort of activity and how you see that evolving as the year unfolds calendar year?

Frank Sullivan -- Chairman and Chief Executive Officer

Sure. So a couple of things going on in Europe. Number one, over the last two years, we have been intensely focused on margin improvement there even to the extent of shedding some lower-margin business deliberately. And so there has been a focus on profitability because the profit levels in our European construction products group are not up to where we are in North America or for that matter in Latin America.

And then the other issue is I think that the reaction to this new surge in every case to these surges of Coronavirus had caused more market and customer-facing disruptions, which are inhibited some of the growth there versus what we're seeing in North America. I think, our experience mirrors the headlines, which are the US economy has been growing through the Coronavirus circumstances in calendar '21 quite well and that has not been as true in Europe.

Ghansham Panjabi -- Robert W. Baird and Company -- Analyst

Got it. And the hundred million in lost sales specific to the consumer for 2Q. You call that if I read that correctly. That would imply quite an increase of quite a bit of an increase of 40% relative to the 2Q fiscal year 20 baseline.

Can you just give us a bit more color on the bridge between the two periods? I know pricing is a piece of that. Obviously, volume and share gains. But how should we think about the sustainability of that? That improvement seems like a very large number.

Frank Sullivan -- Chairman and Chief Executive Officer

Sure and I'll turn it over to Rusty I think he can give you the balance between broadly I think was more like 200 billion and the bigger chunk of that is the consumer. Rusty, you want to add some color to that.

Rusty Gordon -- Vice President and Chief Financial Officer

Sure. Yeah. Ghansham in the second quarter consumer sales is down 18 million. But like we said these sales could have been 100 million or maybe more or higher had it not been for supply chain disruptions in terms of price increases they are going through the third round at price increases here in Q3, but they have had two significant price increases in the fall and spring and that's contributing to that.

The market is still good. We're just losing out on opportunity temporarily to meet the extraordinary demand that's out there. We think that'll come back to us through the revenue line as we increase capacity as supply chain disruptions settle down. There's a lot of reasons why the business long-term looks fantastic.

They are well-positioned, they have a great market share and market-leading brands, but temporarily they face the most acute situation due to the alkyd resin supply or outage last spring. And that's why they're suffering more on the lost sales.

Frank Sullivan -- Chairman and Chief Executive Officer

I will add to that. It's our anticipation that the resin availability issue will be back to normal sometime this spring. And the plant that we acquired in September is going to supply probably 30% of our previously purchased alkyd resin productions. So that's been a big help for us as we ramp that up.

And we would anticipate a fourth quarter that looks good across all four of our segments.

Ghansham Panjabi -- Robert W. Baird and Company -- Analyst

Thanks so much, Frank, and Rusty.

Frank Sullivan -- Chairman and Chief Executive Officer

Thank you.

Operator

Your next question comes from the line of Steve Byrne of Bank of America.

Frank Sullivan -- Chairman and Chief Executive Officer

Good morning, Steve.

Steve Byrne -- Bank of America Merrill Lynch -- Analyst

Good morning, Frank. Perhaps you can help us better understand the differential performance between consumer product construction and performance coatings. You had higher organic growth in the construction products, which you're your EBIT performance was somewhat stronger in performance coatings. Is there's just more of the price you roughly 7.5% going to price up as it was much higher than that in performance coatings or was there something that was just a maybe less of our raw material or cost drag in that segment? Help us better understand how we can look at that going forward from here.

Frank Sullivan -- Chairman and Chief Executive Officer

Sure. So, the Performance Coatings Group lagged some of the maps to growth strong performance and other parts of RPM because of some cyclical challenges particularly in the oil and gas industry, as you'll recall. So part of the stronger performance in our Performance Coatings Group is easier compared to prior year periods and their underlying execution in the map to growth was as good as anywhere else. It was just muted by top-line challenges.

With the top line growing again, you're seeing an extra boost as the map to growth benefits in the Performance Coatings Group are being start -- are starting to be realized as our revenues are growing again. Particularly, in relation to the recovery in some of the more cyclical oil and gas and industrial capital spending markets the Performance Coatings Group serves. That's the first part. Construction products have really been showing strength on strength while we've lots of little margins there in the last couple of quarters and you'll see that turnaround in Q3.

We are generating really strong performance on what we're prior period record results. We are well-positioned and product categories in general and in certain instances the COVID disruptions are actually helping us whether that's in the Nudura build-out, which we expect to have expanded capacity by the end of the summer, or whether it's the roof restoration coatings. The other thing I'll say about both stone hard and flooring in our Tremco roofing division are that both cases uniquely supplied and applied houses. And, so while labor issues are a challenge everywhere including in the construction markets, our ability with dedicated crews to provide installations where perhaps others can have also helped us.

Steve Byrne -- Bank of America Merrill Lynch -- Analyst

Thank you for that and want to ask a little bit about this plant you've acquired back in September and in the last quarter, it was referred to as a Tremco purchase and so are the alkyd resins being produced. This plant will only be through only flow through construction products or will consumers benefit from that? And what other what are the raw chemistries you're likely to pursue of the facility down the road?

Frank Sullivan -- Chairman and Chief Executive Officer

So, that that's a great question and we'll keep that in mind and have a better answer for you in our April conference call broadly. It is part of our Construction Products Group because we are making various intermediate chemicals for numerous RPM companies. It's also in our Construction Products Group because from an RPM perspective there are no RPM-owned and operated plants. Our plants are owned and operated by our subsidiaries.

And so we had to choose a subsidiary that was in a good position both from an operations leadership perspective and the ability to coordinate throughout RPM and our performance -- I'm sorry our Construction Products Group was the right home for that business. Initially, the biggest chunk of focus is producing alkyd resins for our consumer group, but we expect a strong resin supply and other unique intermediate chemical supplies for other RPM companies. And I'll have a better answer in more detail for you in April.

Steve Byrne -- Bank of America Merrill Lynch -- Analyst

Very good. Thank you, Frank.

Frank Sullivan -- Chairman and Chief Executive Officer

Thank you.

Operator

Your next question comes from the line of Vincent Andrews of Morgan Stanley.

Vincent Andrews -- Morgan Stanley -- Analyst

Thank you, and good morning, everyone. Can we just talk, maybe about SG&A a little bit. It's up about $60 million year to date. I know you called out in the release that there's higher incentive compensation this year, but what are the other bucket said that it caused that increase and should we be analyzing that year-to-date increase for the entire fiscal year?

Frank Sullivan -- Chairman and Chief Executive Officer

Rusty, do you want to handle that with some detail?

Rusty Gordon -- Vice President and Chief Financial Officer

Sure. I'd be happy to have one of the main sources of increase year over year commission. We are increasing sales rapidly in some of our higher commission construction and industrial product line areas, Vincent. So the commission is a big chunk of that.

TNE is back. I wouldn't say anywhere close to back maybe it's getting close to halfway perhaps to what it used to be. But TNE, we know basically was zeroed out last year. We've also added some modest SG&A from acquisitions.

We have course pay increases and some growth initiatives that we're pursuing our Specialty Products and a lot of Construction Products Groups as well. So those are the main sources for that.

Vincent Andrews -- Morgan Stanley -- Analyst

OK. And then just in the non-consumer segments, there were some call-outs about some of the revenue that was deferred during the heart of the pandemic. Coming back now, which is obviously great. I just want to make sure that we're thinking about the go-forward properly.

Are these new base levels of revenue growth that you can grow off of? Or should we be thinking about having difficult comparisons maybe a year from now? Because just like last year as earning revenue was understated because revenues were being deferred. Is this year's revenue a little overstated because you made some of that off? Or how should we think about that continuing?

Frank Sullivan -- Chairman and Chief Executive Officer

Sure. I think we'll have some difficult comparisons. So, I don't know how likely we are to be showing the 8% or 10% unit volume growth in the 20% revenue growth and growing, but certainly, for the next couple of quarters, you'll see out of the non-consumer segments, which you referenced the same type of strength that we've seen that with better leverage the bottom line. And in general, we are in construction products, it's new product categories.

I think there's more growth economy out of Europe once we get the margin profile where we want it. I think the categories like Nudura, the roof restoration coatings. Some of the potential there is being quite candidly impacted by capacity, which we're addressing and should have fully addressed in both cases by the end of the summer. So there's really good strength there.

And I don't anticipate anything but positive sales and earnings growth, as we get into fiscal '23 that starts in June. The big recovery in terms of year-over-year performance not surprisingly will come out of our consumer group because we anticipate finally addressing some of these supply disruptions and COVID disruptions by the spring to our fourth quarter. And, as we get into next year hopefully you'll be seeing better flow through, improved supply chains and in that case, pretty significantly disrupted performance results in the quarters and fiscal '22 and consumer. 

Vincent Andrews -- Morgan Stanley -- Analyst

Makes sense. Thanks very much.

Frank Sullivan -- Chairman and Chief Executive Officer

Thank you.

Operator

Your next question comes from the line of Kevin McCarthy of Vertical Research.

Frank Sullivan -- Chairman and Chief Executive Officer

Good morning, Kevin.

Kevin McCarthy -- Vertical Research Partners -- Analyst

Good morning, and Happy New Year to you. Frank your Specialty Products segment had been tracking quite well under new management that margins came in a little bit less than we would have expected this quarter. In your commentary, you said a number of different issues in terms of investments, conversion costs, I mean, chips, legal, etcetera. Can you give us a feel for how many of those issues might persist in the third quarter beyond versus other ones that could be fleeting? And more broadly when do you think, you might start to compare positively on the segment margin in the specialty?

Frank Sullivan -- Chairman and Chief Executive Officer

I think that we have a good shot with turf. First of all, you'll see the performance in Q3. I think we have a good shot at seeing not only sales growth but EBIT year over a year looking positive. The biggest challenge there is as Rusty and Mike alluded to is in our legend brands business that is a business that is a leader in restoration equipment, dehumidification equipment, air filtering equipment, air moving in and high-performance fans, and up from 10 years ago, where this was all manual equipment.

This is all stuff for industrial and commercial settings that can be run off your iPhone. They have significantly more sophistication in terms of boards and chips and we can't get them in. That's a business that didn't run on a big backlog and now has a $40 million or $50 million backlog. We haven't lost market share and we hope to see that being resolved.

Performance in Q3 will look better or worse based on that one business unit's ability to get supply. Back to an earlier question and this is the most extreme example, but it's true in other parts of RPM about inventory, we typically don't operate with much whip work in process and we get a ton of whip in our legend brands business because we have bought all the steel and all the components to put together all of this equipment and we literally have a fair amount of inventory sitting, waiting for chips, which once installed kind of like the challenges of the automotive industry should lead to significant improvements in revenues and earnings.

Kevin McCarthy -- Vertical Research Partners -- Analyst

I see, that it's good to know. And then, secondly Frank, you've talked in the past about the central map 2.0 program. What are your latest thoughts on naming and potential savings says continue to flush that out?

Frank Sullivan -- Chairman and Chief Executive Officer

Sure. A year ago we had hoped to be in a position to provide some details. Now I think it now appears that that's more likely to be this summer. So we'll get through this fiscal year.

I think we anticipate a return to more normalcy across all our businesses in Q4. And so we'll have a better base of business and more normal flow through and hopefully, the Omicron surge here is kind of the beginning of the end of COVID. That would be a nice new year's gift to the world. So, we have been continuing to work on that.

As I commented earlier to John McNulty's question, we are intensely focused on achieving a 60% EBIT margin. All of our businesses know what we were making great progress there. We're back on track in two of our three businesses already, which are construction products and performance coatings and we need to get through these supply disruptions and supply chain challenges and then we will be providing I hope this summer in some detail would be a map to growth 2.0 looks like.

Kevin McCarthy -- Vertical Research Partners -- Analyst

Great. Thank you so much. 

Frank Sullivan -- Chairman and Chief Executive Officer

Thank you.

Operator

Your next question comes from the line of Josh Spector of UBS.

Josh Spector -- UBS -- Analyst

Hey, Good morning. Just a follow-up on the lost sales and specifically consumers. Just wanted to get your view there. Do you need a continued supported demand environment to get those sales back? Or is getting those sales back just the inventory function of customers restocking?

Frank Sullivan -- Chairman and Chief Executive Officer

I think it's a combination of both. When you look at the charts that we supply. We've been relative, I think a good comparison when you go back to our fiscal '20 results versus where current fiscal '22. So we feel like there's an expanded user base because of the pandemic situations.

Quite candidly, all you need to do is go to the shelves of our big customers. And it's not only in our categories it's other categories, but you're looking at fill rates from one week to the next that are 50% to 70% and in industry and in the case of RPM where our fill rates have been 99%, 98% and it's just been a massive chunk of disruption whether it's having stuff ready and no trucks to pick it up. Whether it's being able to produce for three days, but having to pay your workforce obviously full time you can't lose people. And it's been and we were making actually good progress and we were anticipating a better Q3 than we're forecasting now.

And, I just provided some of the details on the Coronavirus cases in the operations center Consumer Group and it's just another unanticipated setback that we will overcome.

Josh Spector -- UBS -- Analyst

OK. Thanks. That's that's helpful. And if I could just ask on Performance Coatings, I guess two things there.

First, you talk about maintenance spending coming back. Can you comment on your backlog in that business? Is it multiple times higher than perhaps you've run in the past, which gives you visibility there? And then in your slides, you talked about decision support tools improving salesforce efficiency the next, can you just kind of explain what exactly that is and how that's helping?

Frank Sullivan -- Chairman and Chief Executive Officer

Sure. So, first, on that last comment and we have commented over the last year or so out of our map growth program and it was really not originally a part of it. We had hired a consulting firm to help a number of our businesses look at their cost pricing mix situation. And it's literally it's not a go raise your prices assessment it's a better analysis of mix.

It's helped us make decisions as I referenced in Europe about product lines that when you look at from a long-term basis. You make decisions as to whether or not they're worth our investment, our time, and our capacity. And they're also trying to get us to the point where we can utilize a better understanding of mix to proactively and offensively incentivate -- incentivize our sales force in the marketplace versus just using the mix as a retro perspective analysis of performance. And so we're doing a lot of work there and some of that is looking at commission structures and relationships to product margin profiles and things like that.

I -- as Rusty and commented on my comment earlier that the billions and trillions of dollars that have been allocated in the United States alone toward infrastructure will benefit our Construction Product troop and Performance Coatings Group. We are well-positioned in terms of public and private infrastructure spending. What's going into hospitals, what's going in the schools, those are markets that we serve. The onshoring and technology we continue to be the leader for instance in floors for all the major tech companies with static dissipating floors as an example.

So, the onshoring of a lot of that is leading to upticks in our business. So, I think the next couple of years in those two business segments look very bright.

Josh Spector -- UBS -- Analyst

OK. Thank you.

Operator

Your next question comes from the line of Jeff Zekauskas of JPMorgan.

Frank Sullivan -- Chairman and Chief Executive Officer

Good morning, Josh.

Jeff Zekauskas -- J.P. Morgan -- Analyst

Thanks. Hi. Good morning. Thanks very much.

When you think about the board's compensation targets for management. It's very difficult to understand whether management is meeting the targets, is a little bit behind the head given that there are so many raw material factors and disruption factors. Can you give this a hand and understand what the board wants from management and if you're ahead or behind their targets, their base targets?

Frank Sullivan -- Chairman and Chief Executive Officer

Sure. I guess the specifics; I would direct you to our proxy, where I think we do a pretty good job of outlining in retrospect, for a particular year, what the targets were and what our achievement level was to those targets. We have actually very good discipline in relation to compensation. We have never repriced options.

We did not make specific compensation changes or adjustments in relationship to COVID situations. And, so, I'd say, we have good discipline there and the details outlined in our proxy. The board has used discretion last year and this year in some areas in relation to making sure that we are focused on market share gains in advancing our businesses. And then also at least through fiscal '21, our progress on a relative basis to our peers in our prior your performance in relation to the map to growth program, which was very effective.

But obviously disrupted by COVID and now supply chain issues. Compensation this year will be a tough, tough issue because like everybody is working twice as hard. Everybody is dealing with a VUCA environment. The likes of which nobody's really seen and the impact and compensation relative to performance won't look particularly great because in a number of our businesses our bottom line targets aren't meeting what our original expectations were.

It may not be fair, but that's life. And again, I would refer you to the details for past comp to our proxies and you'll see the same type of detail in the proxy we put out in August of '22.

Jeff Zekauskas -- J.P. Morgan -- Analyst

OK. And secondly, were volumes in the quarter up on a consolidated basis, up low single-digit? And if you were on LIFO instead of FIFO, would your cost of goods sold have been very different?

Frank Sullivan -- Chairman and Chief Executive Officer

Well, I'll have to defer that question to Rusty. I don't know the LIFO FIFO difference. And again, he can provide maybe the details of unit volume. I can tell you in Performance Coatings and construction products unit volume high single digits or even the 10% range.

And in some of our Specialty Products Groups, we had good unit volume growth except for legend brands, and obviously, we've had a negative unit volume growth in consumer. But Rusty could provide better color. Perhaps as an answer to the LIFO FIFO question because I could not.

Rusty Gordon -- Vice President and Chief Financial Officer

OK. Well, it's been a while since I cracked open my accounting books, but in a rising cost, environment LIFO would generally give you the higher more current costs as compared to FIFO. Mike, is there anything you want to add to that?

Mike Laroche -- Vice President, Controller, and Chief Accounting Officer

No. I mean we haven't done the math on it, I mean, we haven't done the math on it, but I would agree with what you said.

Jeff Zekauskas -- J.P. Morgan -- Analyst

How about volume? How about consolidated volume for the quarter? What was that, was it up a little bit or not?

Rusty Gordon -- Vice President and Chief Financial Officer

Yes, it was up low single-digit like Frank mentioned.

Jeff Zekauskas -- J.P. Morgan -- Analyst

Okay, great. Thank you so much.

Frank Sullivan -- Chairman and Chief Executive Officer

Thank you.

Operator

Your next question comes from the line of Arun Viswanathan of RBC Capital Markets.

Frank Sullivan -- Chairman and Chief Executive Officer

Good morning.

Arun Viswanathan -- RBC Capital Markets -- Analyst

Good morning, Frank. Thanks for taking my question. Good morning, Rusty as well. Happy New Year to all of you.

I guess my question is around the guidance so if you look at the next quarter, you do expect a range for EBIT in that 5%, 15% range down, I guess. When you think about the cadence through the year this is typically your weakest quarter it's just given winter seasonality. So do you expect that range to kind of improve? Also in light of improving raw material availability, as you move through the year and said another way do you expect kind of this quarter to be the worst as far as supply chain and disruptions in raw material availability?

Frank Sullivan -- Chairman and Chief Executive Officer

I think in general that's the right way to think about it. Our resin flow for our consumer business is improving the access plant. And we will provide more detail in April broadly on that with the Texas plant ramp up and alkyd resins are helping significantly. And so, I think you're going to see improvement in each of our segments.

The Specialty Products Group will be particularly related to recovery in our legend brands business or not. Until you'll see a gets a big part of the swing there. And then the throughput on the consumer. I think the biggest variability here that we're not certain about is this Omicron.

A significant disruption in December actually changed what we thought a month or so ago would be more positive results in consumer to another quarter of declines in EBIT in our consumer segment. You will see for the first time in three-quarters positive year-over-year sales growth in consumer. And if trends continue and there are no shocks that we don't anticipate you're going to see a significant improvement across all four segments as we get into the spring.

Arun Viswanathan -- RBC Capital Markets -- Analyst

Thanks for that. And then if I could just go back to the demand question so as you noted demand appears relatively robust across many of your verticals. Where would you say demand is the weakest, I guess? And does that would you say that you still haven't seen a recovery because of COVID or is it something else. And then I guess furthermore, as you implement these price increases is there among your customer base is there a willingness to kind of pass on these price increases to their customers.

And is that what is keeping demand so robust or do you see any risk of this demanding kind of slowing down because of price increases crowding out that demand? Thanks.

Frank Sullivan -- Chairman and Chief Executive Officer

Sure. As we accounted earlier, I think that our geographically, our weakest area performance is in Europe. And we would hope to see European economies pick up more along the lines of the US. In our product categories, we don't see a lot of weakness right now.

I do think it will be interesting as we get into calendar '22 throughout this calendar year. The balance between consumer demand and getting a supply chain and inventory levels back to normal, which they're really not close to right now. And so seeing where that settles out in terms of demand consumer is the area where I think we have the least visibility just because once we can get the supply chain disruptions in place we should have really strong performance for a period of time. If for no other reason to get inventory levels at our customers and in our own shop back to normal levels.

Arun Viswanathan -- RBC Capital Markets -- Analyst

Great. Thank you. 

Frank Sullivan -- Chairman and Chief Executive Officer

Thank you. 

Operator

Your next question comes from the line of Mike Sison of Wells Fargo.

Frank Sullivan -- Chairman and Chief Executive Officer

Good morning, Michael.

Mike Sison -- Wells Fargo Securities -- Analyst

Hey, guys. Happy New Year.

Frank Sullivan -- Chairman and Chief Executive Officer

Happy New Year.

Mike Sison -- Wells Fargo Securities -- Analyst

It sounds like the sales momentum will continue into the fourth quarter. I'm just curious. I know it's early given all the headwinds, but if you think about the potential scenarios for EBIT growth or decline in the fourth quarter what do you think they are? Given the raw material headwinds. the Omicron and so on, so forth.

Could be for the fourth? In particular, if you have positive sales growth again.

Frank Sullivan -- Chairman and Chief Executive Officer

Sure. When you see where our consumer -- I'm sorry, where our Construction Product Group is going, where our Performance Coatings Group is going, we see that strength continuing in the second half of fiscal '22. So, that strong top line in the second half in particular really good leverage to the bottom line. We anticipate that it's literally month to month recovery in our Specialty Products Group and we talked about legend brands.

Our expectation is for recovery consumers nicely in Q4, but we have been providing guidance one quarter at a time because of the visibility of what's happening and the impact of disruptions in light of stress supply chains just made it really difficult to forecast forward with much accuracy. But if the current trends of stabilizing raw materials supply base cost-wise improving base chemicals, which are moving in the right direction. And if Omicron is kind of the last gasp of COVID, which would surely be a blessing then we should have a bang-up in the fourth quarter. And that's that is easy to calculate.

If we can get some of these supply chain issues behind us and we can see a raw material environment that's not you don't even have to be declining it just needs to stabilize.

Mike Sison -- Wells Fargo Securities -- Analyst

Got it. And then, just on that, you mentioned I think in the slides or in the opening comments that you're looking to expand your supplier base. Can you give us a little bit of color on that what you're doing and how you're doing that to maybe improve availability longer term?

Frank Sullivan -- Chairman and Chief Executive Officer

Sure, we -- I think that notwithstanding the disruptions and supply chains, there's always a battle. The communications with us and our major suppliers have been really good through this whole COVID thing and understanding how to deal through force measures, which are down two-thirds where they were we're in the mid-teens on force mature is now across a couple of hundred product categories. We were in the '50s plus across 500 or 600 product categories so that's improved. So there's been good communication there.

There have been one or two instances where suppliers have acted in circumstances that have broken contracts and very transactionally. And so we have opportunities to particularly with a more consolidated procurement activity to make changes where appropriate. And then the Corsicana Texas plant also improves our internal production. We don't intend to be a king of any raw material.

The area that will probably have the biggest capacity is and then alkyd resins and sometime this spring we should be up and running to the tune of 30% of our internal needs. So those are the areas that we think about when we reference supply.

Mike Sison -- Wells Fargo Securities -- Analyst

Got it. Thank you.

Frank Sullivan -- Chairman and Chief Executive Officer

Thank you, Mike.

Operator

Your next question comes from the line of Mike Harrison of Seaport Research.

Frank Sullivan -- Chairman and Chief Executive Officer

Good morning, Mike.

Mike Harrison -- Seaport Global Securities -- Analyst

Hi. Good morning, Happy New Year. Wanting to ask a question about the Pure Air acquisition, you did this back in August, it seems like it's kind of the right product at the right time, as people are starting to return to office buildings, return to other institutions, and want to be more competent around their indoor air quality. You said in a press release that that was running at a $10 million annual sales rate when you acquired it.

I was wondering if you could talk about where the backlog is for that Pure Air deal and maybe a period of business I should say and where you think you can take sales over the next couple of years?

Frank Sullivan -- Chairman and Chief Executive Officer

So, I'd say a great question, I appreciate that you're paying attention to that. Our M&A activity has been successful in the small to the medium-sized range. And the real home runs are where we can buy a unique business or product line and through our distribution or sales force or market presence expand. And I think Pure Air is going to be a great example of that.

It's a $10 or $15 million business that we acquired this year. I would anticipate that in fiscal '23 we'll do north of 50 million bucks. And, if we can expand that in the coming years to what we believe is possible that could be $100 million of product and services. That's part of our WTI business.

And so, boy, if we can find more and more $10 million or $15 million product lines that we think 18 or 24 months later or 40 or 50 and with an upside of 100 million were we would be excited. That's a real winner for us. And that's one example of the kind of those who have followed RPM and I'll talk about somebody here at the end of the call for a long time I've seen this evolve from a very decentralized holding company to what its four groups today in our Construction Products Group was a collection of very decentralized different businesses and has now been much more integrated. We're leveraging our sales forces and that's allowing us to take advantage of product lines like Pure Air and really expand aggressively.

Mike Harrison -- Seaport Global Securities -- Analyst

All right. And just a quick one on the Specialty Group. I believe, you mentioned some legal expenses. Can you give us some color on what that entailed and what's the magnitude of those expenses were in the quarter?

Frank Sullivan -- Chairman and Chief Executive Officer

Sure. It was related to one of our OEM service providers around furniture coatings and furniture warranties and a disagreement that's been ongoing for a long, long time with a West Coast distributor and that was resolved with a jury verdict and I believe in the quarter we took a $2 billion charge? Is that right, Rusty?

Rusty Gordon -- Vice President and Chief Financial Officer

Yes, that's right. 

Mike Harrison -- Seaport Global Securities -- Analyst

All right. Thanks very much.

Frank Sullivan -- Chairman and Chief Executive Officer

Thank you.

Operator

Your next question comes from the line of Kevin Hocevar of Northcoast Research.

Frank Sullivan -- Chairman and Chief Executive Officer

Good morning, Kevin.

Kevin Hocevar -- NorthCoast Research -- Analyst

Hey. Good morning, everybody. Happy New Year. On the supply chain issues.

So if you are $1 million headwinds in the quarter I think it was the same headwind in the first quarter. Forgive me if I missed this but did you quantify how much you're expecting in the fiscal third quarter. And what's baked into the sales guidance that you provided?

Frank Sullivan -- Chairman and Chief Executive Officer

Yeah, I don't know that we've kind of quantify that. Have we, Rusty?

Rusty Gordon -- Vice President and Chief Financial Officer

Yeah, it's a pretty big range. I mean, if you look at December Kevin, we're running at that same pace of the past two quarters because of the disruption from Omicron and the rest of the quarter is a bit of a wildcard simply because typically in the slow seasonal period for RPM we can rebuild the pipeline fill up store shelves that have been empty during this supply chain mess. And to the extent, we're able to do that we might be able to catch up on the previously deferred sales from the past three quarters. We said 200 million in Q2, 200 million in Q1, 100 million back in the fourth quarter of F '21.

So that would be the hope, but so far Decembers and panning out. So I'm not giving these numbers Kevin for that reason it's highly uncertain whether that trend will shift.

Kevin Hocevar -- NorthCoast Research -- Analyst

Yeah. Yeah. Makes sense. And just a quick clarification on the guide, you mentioned high-double growth expectations out of construction products and performance coatings in the third quarter.

Could you maybe give me what that means? Does that mean like high teens or you could maybe get a little bit more color on what you mean by high double-digit growth out of those segments?

Frank Sullivan -- Chairman and Chief Executive Officer

Rusty, why don't you want to address the outlook for the quarter?

Rusty Gordon -- Vice President and Chief Financial Officer

Sure. Yeah. When we say high double-digit, we meant high teens so -- Kevin.

Kevin Hocevar -- NorthCoast Research -- Analyst

OK. Yeah, that's perfect. That's what I was looking for. Thank you very much.

Frank Sullivan -- Chairman and Chief Executive Officer

Thank you.

Operator

Your last question comes from the line of Rosemarie Morbelli of Gabelli and Company.

Rosemarie Morbelli -- Gabelli and Company -- Analyst

Good morning, everyone, and Happy New Year. I was just wondering if PPGs announcement today that they are expanding their relationship with Home Depot would affect your business with Home Depot? Or they are mostly sticking to propane and you are not, you are not in that particular side of the business.

Frank Sullivan -- Chairman and Chief Executive Officer

Yeah, I have not seen that release this morning, Rosemarie, I mean look at it. But we do not compete directly at Home Depot with PPG. They're principally an architectural paint and they're not actively involved in any direct way in the small project paint, or clocks sealants, or patch repair product categories that we are the leaders. So we will look at that.

But as of today, they're principally architectural paint suppliers in a second-tier or third-tier to the bare products.

Rosemarie Morbelli -- Gabelli and Company -- Analyst

OK. And then, if I may follow up on that architectural paint I seem to recall that in the past you have mentioned being eventually interested in that would it be mostly in terms of buying your architectural paint regional manufacturer just mostly focusing on one particular niche?

Frank Sullivan -- Chairman and Chief Executive Officer

No, it's really organically grown in relation to the customer inquiries. So, we've gone from a 500 store test that may be smaller with Walmart and that is expanded to 1,500 stores. It's principally a pre-color so a, a color product for exterior and interior. And we would hope to be able to see that grow significantly in the spring.

But we've had a nice trajectory there. And then we have had some e-commerce online architectural paid programs that are in their very initial phases with Menards and with the Home Depot.

Rosemarie Morbelli -- Gabelli and Company -- Analyst

Thank you.

Frank Sullivan -- Chairman and Chief Executive Officer

All organic.

Rosemarie Morbelli -- Gabelli and Company -- Analyst

Okay, great, thanks.

Frank Sullivan -- Chairman and Chief Executive Officer

Thank you.

Operator

This concludes today's Q&A session. I will now turn the call back over to Frank Sullivan.

Frank Sullivan -- Chairman and Chief Executive Officer

Good, thank you, Dee. And I think it was fitting that Rosemarie Morbelli had the final question. Almost 30 years of covering RPM and being a champion for us in some periods and challenging us and others. She has had an extraordinary career of being an equity analyst, and a research analyst in paints and coatings, especially chemical space.

And Rosemarie, I want to say heartfelt thank you on behalf of me, of course, my father Tom who you knew for many, many years, and all that RPM for good, your good work. And we wish you well and your retirement that was announced last year, and wish you well as you continue Rosemarie Morbelli's excellent adventure. And I'd like to thank everybody on the call for your participation today. Certainly, the environment that we've all operated in the last two years has been extraordinary.

And as I mentioned earlier, supply base analyst base shareholders I think the candid communication and goodwill that has been generated in this period of time has been extraordinary, and it's something we would hope to continue. I wish you all a happy and healthy New Year. And we look forward to updating you on our results and our progress when we meet again next iterate Brunel investor call. Thank you have a great day.

Rosemarie, thank you very much, and happy new year to all.

Operator

[Operator signoff]

Duration: 74 minutes

Call participants:

Frank Sullivan -- Chairman and Chief Executive Officer

Mike Laroche -- Vice President, Controller, and Chief Accounting Officer

Rusty Gordon -- Vice President and Chief Financial Officer

Frank Mitsch -- Fermium Research -- Analyst

John McNulty -- BMO Capital Markets -- Analyst

Ghansham Panjabi -- Robert W. Baird and Company -- Analyst

Steve Byrne -- Bank of America Merrill Lynch -- Analyst

Vincent Andrews -- Morgan Stanley -- Analyst

Kevin McCarthy -- Vertical Research Partners -- Analyst

Josh Spector -- UBS -- Analyst

Jeff Zekauskas -- J.P. Morgan -- Analyst

Arun Viswanathan -- RBC Capital Markets -- Analyst

Mike Sison -- Wells Fargo Securities -- Analyst

Mike Harrison -- Seaport Global Securities -- Analyst

Kevin Hocevar -- NorthCoast Research -- Analyst

Rosemarie Morbelli -- Gabelli and Company -- Analyst

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